DPB2012 - ENTREPRENEURSHIP

© Liyana Norizan DIS2016

 FACTORS THAT INFLUENCE BUSINESS OWNERSHIP
 Capital
CAPITAL

 Personal assets PERSONAL

ASSETS

 Span of control
SPAN OF
CONTROL

 Sharing of information
SHARING
INFORMATION

© Liyana Norizan DIS2016

 FACTORS - CAPITAL
 Main element to determine which type of
business one can venture into

 Cost of forming a company is relatively

high

 Capital also determines the probabilities

in obtaining loans or credits

© Liyana Norizan DIS2016

 FACTORS – PERSONAL ASSETS
 Personal assets are liable to the creditor
if losses are incurred either in a sole
proprietorship or partnership.

 In companies, there is a separate entity

between shareholders and members of
the boards and the company. All loses will
be borne by the company.

© Liyana Norizan DIS2016

 FACTORS – SPAN OF CONTROL

 Sole proprietorship have full power and

authority in carrying out his/her business.

 In a partnership , the span of control is

shared among all partners.

 In a company, the person that initiates the

business will not necessarily be the director

© Liyana Norizan DIS2016

 FACTORS – SHARING INFORMATION

 If an individual decides not to share

information with his counterparts, it is
advisable to form sole proprietorship.

 In partnership or companies, there is no

confidential information among partners,
members of the company or creditors.

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP
SOLE PROPRIETORSHIP

PARTNERSHIP

PRIVATE LIMITED COMPANY

PUBLIC LIMITED COMPANY

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP

SOLE PROPRIETORSHIP
 Simplest business structure with minimal legal
requirement

 Section 4, the Business Registration Act1956 (Amd 1978)

defines a single business as a business established,
owned, financed in terms of finances and management
handled by a single individual.

 Only Malaysian citizens who are permanent residents

can register sole proprietor business.

 Examples of business sole proprietorships are

tailors, beauty salon, convenience store and
laundry.

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP

SOLE PROPRIETORSHIP

Ease of formation Unlimited liability

Total independence Lack of continuity
Total responsibility Lack of experience and ability
Full retain on profits Incurs all loses
No requirement for authorization Limited access to funds
and disclosure of financial reports Limited skills
Taxation advantage Long working hours
Confidentiality Difficulty in obtaining long-term
Fewer legal restrictions financing

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP

PARTNERSHIP
 A partnership refers to a business owned by at least
two or more individuals ( ≤ 20 persons )

 A partnership is formed under the Business Registration

Act1956 (Amd 1978) and the Procedures of Business
Registration 1957

 Only Malaysian citizens who are permanent residents

can register partnership business.

 The owners are called partners. Each partner contributes

money, labour or skills. They will share both profits and
losses of the business

 Two main types of partnership:

1. General partnership
2. Limited partnership

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP

PARTNERSHIP

Increase in resources for capital

Distribution and sharing of Unlimited liability
business risks Lack of continuity
Direct rewards Limited life span
Ease of formation Incurs all loses
Taxation advantage Shared profits
Combined talents and business Shared control
acumen Conflict
Ability to specialize

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP

PRIVATE LIMITED COMPANY

 A private limited company is a company limited by
shares and owned by at least two or more individuals
( ≤ 50 persons )
 The term ‘limited’ means it has a legal identity of its
own that is separated from the people who own it
 The owners are called shareholders. The shareholders
elect a board of directors to run the company.
 The Companies Act 1965 protects the rights and interests of
shareholders and investors.
 Companies shares can be traded but not in open
market (not listed in BSKL)
 The name of private limited company ends with the
word ‘Sendirian Berhad’ (Sdn. Bhd.) or ‘Private
Limited’ (Pte. Ltd.)
© Liyana Norizan DIS2016
 TYPES OF BUSINESS OWNERSHIP

PRIVATE LIMITED COMPANY

Limited liability
High set-up costs
Perpetual life
High taxation
Attracts skilled employees
Limited membership
Ease of expansion
Lack of freedom to transfer
Independent of the members and
ownership
shareholders
Regulations
Ease of raising capital

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP

PUBLIC LIMITED COMPANY

 A public limited company is a company limited by
shares with at least seven or more individuals, there is
no maximum limit in terms of membership
 The term ‘public’ means publicly held, shares of stock
can be traded by investors and public.
 Public limited companies can be either listed or
unlisted on the stock exchange.
- Paid up capital of ≥ RM60 million will be listed on
Kuala Lumpur Stock Exchange Main Board
- Paid up capital of ≥ RM40 million will be listed on
Kuala Lumpur Stock Exchange Second Board
- If the company is not listed, it would publish a
prospectus to offer its shares to the public

 The name of private limited company ends with the

word ‘Berhad’ ( Bhd.) or ‘Limited’ ( Ltd.)

© Liyana Norizan DIS2016

 TYPES OF BUSINESS OWNERSHIP

PUBLIC LIMITED COMPANY

Limited liability
Perpetual life High set-up costs
Transfer of ownership High taxation
Ease of expansion Agency problem
Economies of scale Restriction of activities
Relative ease of securing capital in Regulation
large amounts Financial disclosure
Increase in ability to and expertise

© Liyana Norizan DIS2016

 REGISTRATION OF BUSINESS OWNERSHIP
 An entrepreneur is required to register
his/her business with the Companies
Commission of Malaysia under the Companies
Act 1965 and the Registration of Business Act
1956 for sole proprietorship and partnership.
 The registration of a private limited or a public
limited company can be done at the
Companies Commission of Malaysia under the
provision of the Registration of Companies
Act 1965.

© Liyana Norizan DIS2016

 REGISTRATION OF BUSINESS OWNERSHIP

SOLE PROPRIETORSHIP
• Approved name of the business to be registered
• Registration of business
• Preparing and sending the documents
• Certificate of Approval
• Renewing Business Registration
• Notification of changes in business registration
• Notice of termination
© Liyana Norizan DIS2016
 REGISTRATION OF BUSINESS OWNERSHIP

PARTNERSHIP
• Approved name of the business to be registered
• Registration of business
• Preparing and sending the documents
• Certificate of Approved Registration
• Renewal of Business Registration
• Notification of changes in business registration
• Notice of termination
© Liyana Norizan DIS2016
 REGISTRATION OF BUSINESS OWNERSHIP

PRIVATE LIMITED COMPANY

• Proposed name of the business to be registered
• Reservation of the approved name
• Preparing and sending the documents
• Stamp Duty and Registration Fee
• Corporate Declaration Certificate
• Commencement of Business
• Duration and dissolution
© Liyana Norizan DIS2016
 REGISTRATION OF BUSINESS OWNERSHIP

PUBLIC LIMITED COMPANY

• Selection of name for the proposed company
• Reservation of the approved name
• Preparing and sending the documents
• Prepare the prospectus for shares
• Stamp Duty and Registration Fee
• Obtaining Certificate of Incorporation
• Commencement of Business
• Duration and dissolution
© Liyana Norizan DIS2016